Oracle is in advanced talks with Meta on a multi-year cloud deal that could be worth up to $20 billion. This is another sign, following a series of high-profile deals, that the company, hitherto seen as a second-tier player in the IaaS market, is building a powerful niche in IT’s most strategic segment – infrastructure for artificial intelligence.
The potential deal with the owner of Facebook and Instagram is no coincidence. Meta, developing its language models from the Llama family, needs gigantic and specialised computing power.
Instead of relying solely on its own data centres and existing suppliers, the company is diversifying its infrastructure. Oracle is to provide the resources to train and deploy AI models, complementing, rather than replacing, existing solutions.
The move is part of Oracle’s broader Cloud Infrastructure (OCI) strategy. While OCI’s share of the global public cloud market is still significantly behind AWS, Microsoft Azure and Google Cloud, the company has found a way to challenge them.
Rather than competing across the board, it has focused on offering a high-performance computing (HPC) infrastructure optimised for AI. OCI’s key strengths are its architecture based on high-speed RDMA (Remote Direct Memory Access) network connections and its close partnership with Nvidia, providing access to the latest GPUs.
Such an environment is ideal for handling the distributed, large-scale training tasks that are the foundation of today’s AI revolution.
The Meta talks are not the only evidence of the effectiveness of this tactic. In recent weeks, Oracle has announced four other multi-billion dollar contracts with AI companies. Also widely reported in the industry is a deal with OpenAI to provide ChatGPT developers with access to OCI resources.
These successes show that for companies developing artificial intelligence, specialised capabilities and infrastructure performance are becoming more important than being tied to a single, dominant supplier.
Interestingly, Oracle is not at open war with the market leaders. On the contrary, the company has entered into strategic partnerships with Amazon, Google and Microsoft. These enable customers to run OCI infrastructure directly from competing clouds, significantly lowering the barrier to entry. This collaborative model is already yielding tangible benefits, and the revenue associated with it is growing at an exponential rate.
For the market, this sends a clear signal: although the battle for general-purpose cloud leadership seems settled, the race to dominate the AI niche is only just beginning. Oracle, with its strategic focus and technological strengths, is emerging as one of the key players in it.
